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Monday, July 1, 2013

Is a professor in a fiduciary relationship with a graduate student or postdoc?

In case you haven't heard, Paul at ChemBark has recently broken the story of Harvard chemistry professor Andrew Myers being sued for a lot of money by one of his former graduate students, Dr. Mark Charest -- upwards of tens of millions of dollars, it looks like.

Very long story, shortened: Charest and coworkers were grad students and postdocs of Andrew Myers. Collaboratively, they developed a new route to tetracycline antibiotics; this route was patented and published by Myers and coworkers and Tetraphase Pharmaceuticals was born from their work. When it came time to split royalties from the patent, Professor Myers announced (via the Harvard patent folks) that he was taking 50% of the royalties and the other students/postdocs would be free to split it as they saw fit. Mark Charest was unhappy with this arrangement, but was ultimately forced to agree to taking 18.75% of the royalties. He filed a lawsuit on this last Friday in federal court. (Lots more details are in the complaint.)

It will be interesting to see how this story plays out, but it would seem to be yet another cautionary tale that when you are a graduate student, you are in a position of incredible weakness. As is said, your advisor holds your paycheck in one hand and your letter of recommendation in the other. And in case you are naive, the chains don’t get unshackled just because you’ve graduated. You’re still going to need that letter of recommendation for future jobs, so if your old boss wants to take 50% of the royalties, what’s to stop him?

Nothing.

I wish I could find something to argue with in there, but I can't. (Well, okay, I think that 5 years after you leave your PI, their words begin to lose a fair bit of weight, and they should begin dropping off your CV as a reference. (I mean, seriously, how much do they know about your current job performance?) Problem is, of course, is that the more prominent the professor, the more likely it is that they'll stay on your CV.)

What I found interesting is one of the final statements by Dr. Charest's lawyers on page 35 of the document:

259. Dr. Myers was Dr. Charest’s PhD advisor.
260. Dr. Myers advised Dr. Charest and headed the lab in which he worked on the research that led to the Pioneering Tetracycline Patents.
261. Dr. Myers had a fiduciary duty to Dr. Charest.
262. Dr. Myers breached his fiduciary duty to Dr. Charest by using his position as a fiduciary to secure more royalties for himself to the detriment of Dr. Charest.

I was surprised to learn that, in the view of Dr. Charest's lawyers, his PI had a fiduciary duty to his student. That term is supposed to invoke quite a trusting relationship -- here's Wikipedia:

Typically, a fiduciary prudently takes care of money for another person. One party, for example a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to the other one, who for example has funds entrusted to it for investment. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

It's easy for me to think of my (deep, loving, Boglehead-esque) relationship with the mutual fund company Vanguard as a fiduciary one. It's rather difficult for me to think of a professor as being in a fiduciary relationship with a student. However, a conversation with @NCharles on Twitter reveals two lawarticles which argue that the picture is murky, but in cases where intellectual property is in play, professors seem to be in a fiduciary role with their students and have found to be in breach of their fiduciary duties. From the 2nd link above, an interesting comment about a case of a biology grad student (Chou) and her adviser (Roizman) and some patents that the adviser filed for, without including her on them (emphases mine):

...From 1983 to 1996, Chou was a doctoral student and subsequently a post-doctoral research assistant at the University of Chicago’s Department of Molecular Genetics and Cell Biology. Roizman acted as chairman of this department and as Chou’s advisor. [snip]

This dispute commenced in February of 1991, when Chou allegedly suggested to Roizman that her discoveries should be patented and he opposed the idea. At the time the discussion occurred, however, Roizman had already filed a patent application for the inventions, listing himself as the sole inventor. In 1996, Roizman asked Chou to resign, and told her if she did not resign, he would fire her.

...The appellate court upheld Chou’s claim against Roizman for breach of fiduciary duty, recognizing that “a fiduciary relationship may . . . arise from the special circumstances of the parties’ relationship, such as when one party justifiably places trust in another so that the latter gains superiority and influence over the former.” The rapport between Chou and Roizman suggests a fiduciary relationship between the two parties. For thirteen years, Roizman was Chou’s supervisor in the laboratory as well as her educational advisor. A long-term supervisory relationship such as this, especially during the initial development of a student’s career, should indicate a fiduciary duty on the part of the supervising professor. Further, the court specifically found certain factors present in the relationship indicating Roizman’s fiduciary duty to Chou. Specifically, the court determined that there was a disparity in the two parties’ experience and roles and that Roizman had the power to make decisions regarding the patenting of Chou’s inventions.

Well, that was a bit of information that I was not aware of while in graduate school! I believed (and still do) that my adviser had, within reason, my best interests in mind. I did not extend that to the fair division of a crapton of money, which is the realm of the relevant Charest/Myers case (Tetraphase's initial funding was for $25 million.) Money unleashes people's greed -- and it always has. In this sense, this case is sad, but not surprising.

While I would really be interested to see documents from the discovery phase, or how a trial court or a trial jury might react to the very imbalanced relationship between adviser and student, I don't really expect anything to come out of this case, other than a quiet settlement. Readers, what do you think?

39 comments:

I'd like to hear an industry person's take on this... As I understand it, in the analogous situation in industry the inventor gets no access to royalties and the company gets everything. The inventor may benefit in other ways, but not directly from royalties.

Apparently not so in Germany. When I was younger my dad told me how his company was considering the purchase of a BPA process from a German company - the asking price was 25M, and the inventor was going to get a generous 5M cut of that. Ultimately the price was a big too steep and an alternative route was developed.

Based on "Harvard’s policy is to distribute royalties equally among all of the inventors on a patent unless the inventors agree to a different distribution", it does sound like Myers hosed Charest. Pretty decent of the other grad students to accept smaller %s: I guess they didn't learn humility from Myers....

I'm not sure if it's still the case, but I was struck a few years ago that all the patents from the Boger lab only list Dale as inventor. He must be busy.....

Wow, I didn't really believe that when I read it, but sure enough, a quick search revealed only his name on any patent he was involved with. I didn't go back very far, but at least as far back as 2000 I only see his name on there. Interesting indeed...

I don't think thats accurate. As a student I would most certainly demand to be on the patent, and if my PI wasn't willing to put me on there that would be an issue. I don't think PI's who leave off students know what they are getting into by leaving off students. Most of the time it doesn't matter b/c 99% of the patents never amount to anything, but let a student do all the work on an invention and then it hit big and the PI have left them off and whew boy, that would be fun court case.

I would say 99% of students who have no idea their PI is filing a patent are left of patents for sure.

That exactly accurate. Moreover PI is in his right to do so. It is his name on grant application and any independent intellectual contribution from a student is hard if not outright impossible to prove. By the same token non-PhD researchers in industry typically don't get their name on patents, although there there is often a formal meeting where individual contributions are discussed.

Meh, non-PhD researchers in industry is quite a bit different than original research projects that are parts of dissertations. The grant application has nothing to do with a patent as far as I know. Outright contribution from a student is quite easy to prove if accurate notebooks are kept.

I know several people who hold patents from their dissertation work, some of whom make a little money from it (very little money). In all the dealings I had during my graduate studies I was included on patent applications and it was the norm University wide. Maybe my University (a large State one) was just odd in that way.

By the same token non-PhD researchers in industry typically don't get their name on patents, although there there is often a formal meeting where individual contributions are discussed.

The non-PhD thing is actually not true, as someone with ~10 issued US patents can attest. Anyone who makes an intellectual contribution to the work, and can demonstrate this, actually *has* to be on the patent, otherwise it becomes vulnerable to litigation and potentially invalidation. It's almost always better to err on the generous side of inventorship than potentially leave someone off who could then come back and sue. We all sign away our rights to the patents, but inventorship is still a very important part of the process. Degrees mean nothing in this process.

Most companies do have a process to vet intellectual contributions during the patent writing process. Simply making compounds isn't enough.

Exaclty Aqueous Layer. One who contributed intellectually to the idea must be included on the patent, otherwise the patent is invalid. It's a bit difficult with intellectual property. The person who came up with the idea is rewarded, not necessarily the person who proved the idea worked.

In my experience, each inventor has to send statements of his or her contribution and the lawyers determine the inventorship. I would assume Harvard did this. BTW, there is more ways to prove the idea other than just a lab notebook.

I think Charest may be hosed because he did sign for 18.75%. I don't know if he has a case on the second patent that doesn't have his name on it.

Yes, and that is why I say there's typically a meeting with IP lawyers sitting in to determine who contributed to the patent. And I totally agree - there's no reason not to be generous to non-PhD researchers, especially since often they _do_ contribute intellectually, and the rights are are signed away in any case. But it comes down to institutional culture - I've met people who would not shake my hand because my PhD isn't from top 10 school - how much credit do you think their subordinates get?

I know very little of the US situation but in the UK, the University initially owns any inventions (and income derived from) created by its employees (note: employees). These rights are signed away in the employment contract, much like in industry. In the case of students its more complicated- PhD student contracts tend to have similar clauses, but undergraduate students, if an inventor, may have to sign a subsequent contract signing away rights. However, Universities over here tend not to be complete *******s and will grant inventors a royalty/equity share, usually dependent on seniority of the inventor, with the Uni keeping roughly 50%.

Its also important to distinguish between inventors and owners of patents. PhD students have every right to be an inventor on a patent, but that depends on their contribution. If the prof tells them to go away and make chemical X, and the student invents their own way of doing so then they should be an inventor. If the prof says "go away and make chemical X by doing reactions A, B and C" then its questionable if the student would have contributed anything inventive. Plus, the inventors have to actually invented something that's contained in the patent. Ensuring inventors are correctly identified can be important as patents can be invalidated if a name is missing, although this usually requires litigation.

I don't think there's that much difference between a graduate student or post-doc and someone working someone working an industrial lab. Both are paid to invent and usually given pre-defined projects.

Yeah, I think something getting lost in the shuffle here is the "ownership" vs. "inventorship" and how those are not the same thing. Certainly most schools here in the US require signing of a similar document when you begin research, but that doesn't mean you are automatically excluded from being an inventor, and like someone said previously, leaving out an inventor is only harmful as it would invalidate the patent in the future if the issue was pursued.

In most cases I have first hand knowledge of people are much more likely to be generous with inclusion, albeit at a low % of involvement. This is the safest way to approach it b/c proving someone was wronged by % points is a much harder argument, as we are about to see with Dr. Charest's argument.

Wherefore, Plaintiff respectfully requests the following relief:A. Rescission of the Tetracycline Assignments;B. Declaratory judgment that the Tetracycline Assignments are invalid for lack of consideration;C. Rescission of the Pioneering Tetracycline Patents royalty rate agreement;D. An increase in Dr. Charest’s share of the Inventor Royalties from 10.31% to at least 20%;E. Monetary damages equal to 9.7% of the Inventor Royalties on at least $500 million in yearly sales for the years 2016 to at least 2025, discounted at a reasonable interest rate;F. Disgorgement of any benefits Dr. Myers received from the above actions;G. Punitive damages;H. Treble damages;I. Attorney’s fees.

They would be novel tetracycline analogs, not generics, so they could make lots of money for someone (though with antibiotics, use constraints might limit market size, so they won't be blockbusters - maybe < $1e9?). They probably can't be made semisynthetically, so without having either a license to Myers's and Harvard's patents or the patents broken, you can't get to them. You also have a wider space to discover things - if you can make a lot of cpounds quicky, you might find other things to do with them before anyone else can.

Getting your name on a patent is a matter of fact and law. There are specific and fairly non-ambigious standards for inventorship. Power, employment status, and who is the PI legally play no role in this.

@somedude: If they leave a student's name off the patent (as in the cited case), the student has a hole card - they can have the patent invalidated through the PTO (so that it won't cost them any money, and if the relationship is as bad as this one, they have nothing to lose). The lab notebooks are probably not the advisor's or the university's sole property if the research performed and described in them was funded on federal grants, and so they probably can be subpoenaed and can't be destroyed (assuming student didn't make copies). The lab notebooks would provide evidence of the experiments performed and of thus who should be (or have been) on the patent. If the inventors aren't on the patent, bye-bye patent. Tetraphase probably has patents on sets of compounds, but without holding the methods to make them, someone bigger can probably get close, and big company versus little company in court might not go so well.

With the above case description, Myers's conduct towards Charest sounds like the financial equivalent of sexual harassment. Just as you can't use your position as a teacher to compel students to have sex with you (even without overt compulsion), you probably shouldn't be able to compel them to let you (bleep) them in other ways. On the other hand, big professors and big universities with near-infinite amounts of money usually get their way.

Showing notebook is not enough. Apart from the fact that notebook validity could be called into question if it is not dated and witnessed, it in no way proves that the reactions were not done on specific orders from the PI. And if the patent does not delve into the specifics of synthesis, and only talks about activities, then if the PI came up with all the structures, the student is SOL.

1) Have you ever been in a lab where notebooks were witnessed or countersigned? I've heard lots of dire warnings about being diligent about keeping lab notebooks, but exactly zero about having them witnessed and countersigned. In the four years I spent in grad school (a while ago, but in a place where spinouts were common) I saw or heard of zero witnessed notebook signings. It could be common in pharma (although, at least in big pharma, I imagine that most are electronic and probably contain audit trails), but almost certainly not in grad schools. In addition, the inventors were granted the patent based on the evidence in lab notebooks, again almost certainly not countersigned.

2) I don't think the "I told the grad students and postdocs everything to do" will hold much water. One, if that were the case, why not hire undergrads, or permanent employees; in the former case, it's unlikely anyone would assume they were inventors, and in the later, the lab would own the IP by employment agreement. Why use grad students and postdocs who have enough working knowledge to confuse the issue of inventorship? Two, I don't think it would be plausible enough to pass a jury if you say that determined the activities of >20 grad students, postdocs, and undergrads, managed the finances and grants of the research group, and probably both consulted and ran side businesses, all while managing to sleep. My advisor had a very good grasp of everyone's projects, I thought (lots of different ones, in multiple different fields), while running multiple spinouts, consulting, and doing review work, and even he couldn't play Gepetto. I don't think it would be hard to convince a jury that "he told the plaintiff every experiment to run" is about as believable as "I just happened to buy my lottery ticket on my own the day I bought everyone else's in the pool".

In addition, there's another issue - the whole point of grad school is to teach. If your students can't come up with ideas on their own, and can't figure out what to do, well, your recommendation isn't going to be worth much in getting a job, because if you knew what was going to happen, it wouldn't be research, and there are lots of other robots and people who are cheaper and as competent as your robots.

Unfortunately legally your points don't really matter much. In industry, witness and countersigning is not only common it's a legal requirement . I remember having to do it every 3 or so months to a new set of notebooks (those directly below me most times but some lateral notebooks as well). Just because it isn't done in graduate school doesn't mean it doesn't matter. There's a reason it's done in industry as a standard practice: it severely limits patent liability.

Also, running the experiments doesn't matter. There's a fundamental difference between inventive contributions and actually proving that concept. The patent documents the inventive contributions (the theoretical aspects mostly) and not the persons who ran the experiment. This case will really depend on Myer's/Harvard's response during the initial assignment of ownership. If there was improper conduct, he has a legitimate case (and this depends on a lot of factors). If he did sign it away, however unfair it may be, he might be hosed.

1) If countersigning were as critical to defending a patent as you say, then one would assume that academic groups at places intending to patent lots of things (such as *cough*Harvard*cough*) would have implemented either an e-notebook system or a countersigning system. Even if Harvard didn't want to spring for it, individual groups could initiate either one. The fact that they don't indicates that countersignature is not necessary to defend a patent - helpful, yes, but not helpful enough to outweigh the costs in setting up the management system. In industry, all they have is IP - no IP, no business, so protecting the IP is paramount, while in academia, as long as the federal government provides grants and overhead, they can do OK, so it would be an issue of relative costs and benefits in defending and assigning patents.

2) Ideas can't be patented, only implementations, and for synthetic methods, either you have implementation or you have an idea (which you can't patent). Given that, it then is a question of how much input the advisor/boss had in determining the experiments and in determining the key factors necessary for the idea to work.

As I said, convincing a jury that a professor could probably not design experiments for twenty students, and run a research group, consult, and design and run companies is probably not manageable in real time would not be hard (or unreasonable). In that case, the people doing the experiments had to have come up with some of the invention themselves - if the techniques were standard, then doing them wouldn't take much experimenter intellectual input, but since at least some of them weren't and required optimization of various factors, input would have had to come from the experimenter (if it didn't come from the advisor, it came from somewhere, and if it came from someone not on the patent, well, then the patent could be killed).

From Anonymous's link to Wikipedia: "Generally, conception is "the complete performance of the mental part of the inventive act", and "the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention as it is thereafter to be applied in practice..". An idea is usually not "definite and permanent" or "complete" where changes result from experimentation."

3) Signing an agreement isn't enough - if someone forces you to get married at gunpoint, the marriage doesn't count because it was coerced. I don't have any idea if that would hold water here, but having the name on the dotted line might not be enough (the point of CJ's quote of Paul being that the relationship is inherently unequal and readily subject to coercion).

You cannot patent ideas no, but the person who gets to be an inventor is the person who has the original idea, not the person who ran the experiments. Unless Dr. Charest has written and dated proof of his intellectual contributions to the project, it's going to be difficult to move forward with that case. I don't think Andy Myers is a typical PI (he's not) and I don't think he'd have a problem having a bunch of other PIs coming forward to testify that he is indeed capable of running a group that size. It's he said she said at that point and he's got better people to speak for him.

No, that's not true - unless the idea were identical to the implementation, the person who implements it is also an inventor (because they added features to it to make it work - the difference between an invention and an idea is the ability to function). Lab notebooks are there to document that process - if they didn't work at that, one would figure that everyone (or at least Harvard) would be doing something else to document. Documentation moves arguments from "he said, he said" to "can you read?". At that point, it would be up to Myers to show documentation that he came up with the idea and its exact current implementation.

If you could find one professor who could show that he defines all of his subordinates' experiments on a daily basis, that would be a start. I would not doubt any research professor's ability to run a group (well, maybe that prof at Texas Tech whose cowboy grad student blew himself up), but I would doubt their abilities to specify ahead of time exactly what their students will do, for the list of reasons above.

I think some commenters here are not aware that the law prescribes who is to be listed as an inventor on a patent in the US. Each claim of a patent is a separate invention and each inventor listed on the patent application must have made an inventorship contribution to at least one claim listed therein. No one who has made such contributions can be left out and no one who has not made such contributions can be included. Indeed, an improper listing of inventors can invalidate a patent.

Furthermore, assisting in the reduction to practice of a conceived invention is irrelevant with respect to establishing an inventive contribution. For a decent introduction on the legal definition of inventors in the US see http://en.wikipedia.org/wiki/Inventor_%28patent%29#United_States The fact that such legal specifications sometimes do not align with our sense of who did the "work" may cut against our sense of fairness, but it is not the law and, in my opinion, I think there are good reasons why it should not be the law.

Getting more into the topic, who is(are) the assignee(s) or owner(s) of the invention is a separate question from who is a named inventor. All inventors are by default equal share owners of the patent unless an assignation of ownership is made. Such assignations may be contractually obligated under the terms of employment of the listed inventors by the company or by the university that employs them. Sometimes the employer has stipulated that they are entitled to complete ownership themselves (i.e. the assignation names the employing company alone as 100% owner). Under other circumstances the employers may have a policy that promises a certain percentage of ownership to the named inventors, which apparently is the situation at Harvard, where I understand the inventors are promised a 35% share.

To me it appears the case will depend upon several points: (1) what are the policies of Harvard that establish a process by which the ownership of the inventors' share is subdivided; (2) was such policy followed; (3) whether Harvard was legally enjoined to follow such policies; and (4) whether Harvard and/or Myers subverted the process or policies of assignation by deception or coercion.

The Tetraphase website mentions phase 3 clinical trials but no actual sales. The complaint mentions $500,000,000/year sales but beginning in 2016. Good to get your foot in the door early but how many start-ups ever achieve any sales?

See the Bayh-Dole Acthttp://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act

It allows professors and universities to own the work created by federal funding. There is a lot of criticism on both sides of the issue. I am not exactly sure on where I stand with it (I certainly lean one way).

I was an international student sponsored by my Gov in one of top US universities. I worked over 5 years on my PhD. My advisor held up my dissertation without publication over a year after my graduation till he filed for a patent. He filed for a patent and announced in the media that he invented this patent with no single word for his coworkers. I was in good relationship with him before and after leaving the State. He promised me that he will offer me a Post Doc fellowship. He did not fulfillment his promise and even he excused for giving me an acceptance letter to apply for any announced scholarship. At this point, I decide to publish my work and succeeded to contact a professor pioneered in this area but very shortly he lost his interest and disconnected. This is really weird situation, have got my PhD from USA, a patent out of my PhD work, publications, and failed to get Post Doc fellowship and he got the patent. I have my position in my country but I feel disappointed every time I looked back and memorized such things and how much time and work spent on this patent?!

I was an international student sponsored by my Gov in one of top US universities. I worked over 5 years on my PhD. My advisor held up my dissertation without publication over a year after my graduation till he filed for a patent. He filed for a patent and announced in the media that he invented this patent with no single word for his coworkers. I was in good relationship with him before and after leaving the State. He promised me that he will offer me a Post Doc fellowship. He did not fulfillment his promise and even he excused for giving me an acceptance letter to apply for any announced scholarship. At this point, I decide to publish my work and succeeded to contact a professor pioneered in this area but very shortly he lost his interest and disconnected. This is really weird situation, have got my PhD from USA, a patent out of my PhD work, publications, and failed to get Post Doc fellowship and he got the patent. I have my position in my country but I feel disappointed every time I looked back and memorized such things and how much time and work spent on this patent?!